Amgen ($AMGN) is wheeling and dealing to protect sales of its anemia drug Epogen. The drugmaker has inked two new long-term supply contracts with dialysis providers, as it prepares for potential competition from a new branded rival, not to mention biosimilars on their way down the pike.
With discounts and rebates, Amgen has snared a 7-year contract with DaVita to supply at least 90% of the dialysis company's anemia remedies, plus a "multi-year" deal with Fresenius Medical Care. Together, the two companies account for almost 60% of the dialysis market, Reuters reports.
Any way you approach it, the supply deals give Amgen a "lock" on the dialysis business, analysts said. "Amgen has effectively locked in two-thirds of its Epogen customer base with these DaVita and Fresenius contracts," Stifel Nicolaus analyst Maged Shenouda said in a research note (as quoted by Reuters). And ISI Group's Mark Schoenebaum noted, "Amgen's incentive to sign such a deal might be to basically lock competitors out of a full third of the market."
The supply deals come as Medicare is changing its reimbursement for dialysis to a flat rate. The change has been expected to cut into Epogen sales, because the dialysis providers won't be paid any more for higher doses of the drug than they are for lower doses. Safety questions about higher doses of Epogen continue to mount as well. But perhaps most importantly, a new anemia drug from Affymax ($AFFY) could be launched in 2012, while Roche's Mircera is expected to hit in 2014 and biosimilars as soon as 2015, Bloomberg notes.